Home -> Law Blog Directory -> Arbitration & Mediation Blogs -> CKA Mediation and Arbitration Services Blog

Arbitration & Mediation

: CKA Mediation and Arbitration Services Blog

What Happens to Agreements to Mediate after Advanced Bodycare Solutions?

By Christopher Annunziata

Last week, the Eleventh Circuit ruled in Advanced Bodycare Solutions, LLC v. Thione International, Inc., No. 07-12309, (April 21, 2008), that for purposes of the Federal Arbitration Act (FAA) mediation is not arbitration; therefore a party cannot use §3 of the FAA to enforce an agreement to mediate or mediation clause.* While I do not disagree with this specific, limited holding, I am still left to wonder about the enforceability of mediation clauses in light of the court’s obiter dicta.

On the one hand, the Court goes to great lengths to note that “[t]his opinion should not be read as denigrating mediation,” that they “encourage parties to make liberal use of [mediation],”** that they “encourage district courts to liberally employ any authority . . . to order mediation sua sponte.”

Despite all the pleasantries and platitudes about mediation in the final paragraph, the Court seemed to go out of its way to suggest that mediation is little more than a speed bump on the way to the courthouse, even stating that “agreements to mediate are [not] per se unenforceable.” That sounds like judicial doublespeak for “the Court really doesn’t think that mediation clauses are enforceable, but we are leaving open the possibility that there may be very limited circumstances where we may enforce them.”

More after the jump

I understand that the Court of Appeals was faced with a specific, limited issue in this interlocutory appeal:

Whether the Federal Arbitration Act permits enforcement of a contract clause requiring an aggrieved party, prior to filing a lawsuit, to institute mediation or non-binding arbitration.

And I agree with its admittedly limited holding that “the mandatory remedies of the FAA may not be invoked to compel mediation.” But I believe they suggested too strongly that mediation clauses are not enforceable and would be disfavored.

In reaching its central holding, the Court seems to rely on the premise that “arbitration is a creature of contract; a party may not be compelled to arbitrate if he did not agree to do so. [Cit. omitted].” The Court also noted that “compelling a party to submit to settlement talks it does not wish to enter and which cannot resolve the dispute of their own force may well increase the time and treasure [Ed. note - Seriously, treasure?] spent in litigation.”

The Plaintiff in the underlying action, Advanced Bodycare Solutions, was not being “compelled to arbitrate [when they] did not agree to do so.” They entered freely into an agreement that required them

to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies. If within sixty (60) days after such written request, the parties have not succeeded in negotiating a resolution of the dispute, such dispute shall be submitted to non-binding arbitration or mediation with a mutually agreed upon, independent arbitrator or mediator.

Why should a mediation clause be any different than an arbitration clause?

I am sure there are members of the ADR community who would believe that since mediation is voluntary, a party’s consent must be given freely and at the time of the mediation.  But the fact that the Plaintiff changed its opinion on mediation (likely at the suggestion of litigation counsel) should be of little consequence.  The mediation clause is a contractual provision like any other and can be read as a prerequisite to filing suit.  A party should not be able to ignore the mediation clause any more than it should be able to ignore any other provision, such as choice of law or venue provisions, which are routinely upheld.

I guess we will have to wait for another case to make its way up to Atlanta.

————

*For purpose of this post, an “agreement to mediate” or “mediation clause” refers to a clause or paragraph of a contract in which the parties to the contract agree to mediate any future disputes.

**The Eleventh Circuit is one of the few federal appeals courts to have a dedicated appellate mediation program with full-time appellate mediators on staff.

Share This

Full post as published by CKA Mediation and Arbitration Services Blog on May 01, 2008 (boomark / email).